Illinois citizens group urges veto of coal gasification bill

The Illinois Citizens Utility Board (CUB), which is a ratepayer advocacy group, urged members in a July 3 posting on its website to write Illinois Gov. Pat Quinn and tell him to veto a bill that would support the controversial Leucadia National coal gasification plant in Chicago.

The Leucadia bill, SB 3766, would require Ameren and Nicor to sign 30-year contracts to buy gas from this plant. “The Chicago Tribune, which has called for a veto of the bill, reported that Ameren and Nicor customers would be required to cover the $3 billion in costs to build and operate the plant, and could pay triple the supply rates found in the current natural gas market,” said the CUB posting. “One analysis by a consumer advocate found that consumers could pay $2.4 billion in higher rates over the first decade of the plant, which is set to be built by 2017.”

CUB noted that this is the second time Gov. Quinn could veto a pro-Leucadia bill. Last year, he forced the company to make concessions, applying a cap on rate increases and creating a $150m fund to help soften the blow to consumers. “But then Peoples Gas and North Shore Gas, two Chicago-area utilities, dropped out of the proposal, saying the gas increases would be too punishing for customers,” CUB stated. “The exit of those two utilities led Nicor and Ameren to complain that its customers would now be forced to shoulder too much of the costs. State regulators agreed with Nicor and Ameren, but legislators responded with the current bill, which would force Ameren and Nicor to cover more of the construction costs.”

Leucadia National is developing the project through its subsidiary, Chicago Clean Energy. The plant would be located on a former LTV Steel plant site on Chicago’s southeast side, and would use at least 1 million tons of Illinois coal per year.

The project website said the $3bn project is guaranteed to provide more than $100m in savings for Illinois consumers over 30 years – and is projected to provide more than $1bn in consumer savings. “In fact, the economics of the project are based on consumer savings: the project makes money by sharing the savings that result from the price of market-rate natural gas exceeding the cost of our substitute natural gas,” the website added. “What’s more, the savings from this project will be greatest when consumers need it most: when natural gas prices spike and are at their highest, then we will provide the most savings.”

The Illinois General Assembly website shows the bill was sent to the governor on June 11. There had been no announcements about SB 3766 posted to the governor’s website as of mid-day on July 5.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.